The head of Ripple, one of the biggest blockchain companies, has said its $15bn of cryptocurrency reserves could be used to acquire or partner with rivals, as it seeks to dominate its fast-moving sector within financial technology.
Brad Garlinghouse, chief executive of Ripple, said the California-based company had “moved out of the sandbox” after signing up more than 100 customers, many of which were now using its blockchain technology to move large sums of money across borders.
Blockchain is an electronic record keeping system that uses cryptography to create verifiable histories of transactions. It is a core component of cryptocurrencies such as bitcoin and Ripple’s own XRP.
“This is not a science experiment, it is about using real money for real customers,” Mr Garlinghouse told the Financial Times. “There are a lot of blockchain tourists out there who are kicking the tyres, but we are well beyond that.”
The company on Tuesday announced several new customers had signed up to start using its technology for cross-border payments, including France’s Crédit Agricole, Brazil’s Bexs Banco and Uruguay’s dLocal.
It also said that SEB, the Swedish bank, had used Ripple’s system to transfer $180m between Sweden and the US in recent months to help manage the cash balances of one of the bank’s large corporate customers.
Ripple’s cross-border payments system is based on using its XRP cryptocurrency, which customers buy and sell almost instantaneously to move money between countries and currencies over the company’s system.
It allows cross-border payments to be completed within 10 to 15 seconds, compared with about three days for interbank transactions using the Swift network.
The value of XRP has multiplied by 25 in the past five months amid a wider boom in cryptocurrencies. While the market value of XRP has risen close to $10bn, there is a further $15bn of the cryptocurrency that Ripple holds in reserve.
“Ripple owns about $15bn of XRP and we will use that to ensure that we continue to advance,” Mr Garlinghouse said. “One of the biggest challenges for investors and the media with blockchain is to decide what is real and what is hype, as frankly some of this stuff can be done with a simple database,” he said.
Leading bankers including Jamie Dimon, chief executive of JPMorgan Chase, have dismissed cryptocurrencies such as bitcoin as a “fraud” and while central banks around the world have examined blockchain technology many of them have said it is too immature for them to use.
But Mr Garlinghouse said blockchain technology offered numerous advantages over the current system for moving money around the world, which he said was plagued by errors and inefficiencies.
“For decades the payments industry has been ruled by an oligopoly of large firms like JPMorgan, Citigroup and Visa, for which it is a massive cash cow,” he added. “But now with the internet, people expect payments to be immediate, smooth, reliable and low-cost.”
Mr Garlinghouse said Ripple would save big financial institutions money because it would spare them the need to hold an estimated $5tn of funds in pre-funded “nostro” accounts around the world to handle cross-border payments for themselves and their clients.